MARCH 2017 QUARTERLY PRESENTATION
April 2017
MARCH 2017 QUARTERLY PRESENTATION April 2017 IMPORTANT - - PowerPoint PPT Presentation
MARCH 2017 QUARTERLY PRESENTATION April 2017 IMPORTANT INFORMATION This document has been prepared by Stanmore Coal seek appropriate advice, including financial, legal and earnings and estimates are provided as a general guide Limited
April 2017
This document has been prepared by Stanmore Coal Limited (“Stanmore Coal”) for the purpose of providing a company and technical overview to interested analysts/investors. None of Stanmore Coal, nor any of its related bodies corporate, their respective directors, partners, employees or advisers or any other person (“Relevant Parties”) makes any representations or warranty to, or takes responsibility for, the accuracy, reliability or completeness of the information contained in this document, to the recipient of this document (“Recipient”), and nothing contained in it is, or may be relied upon as, a promise or representation, whether as to the past or future. The information in this document does not purport to be complete nor does it contain all the information that would be required in a disclosure statement or prospectus prepared in accordance with the Corporations Act 2001 (Commonwealth). It should be read in conjunction with Stanmore’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange, which are available at www.asx.com.au. This document is not a recommendation to acquire Stanmore Coal shares and has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making an investment decision prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek appropriate advice, including financial, legal and taxation advice appropriate to their jurisdiction. Except to the extent prohibited by law, the Relevant Parties disclaim all liability that may otherwise arise due to any
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reliance on any of this information, whether such liability arises in contract, tort (including negligence) or
This document contains certain “forward-looking statements”. The words “forecast”, “estimate”, “like”, “anticipate”, “project”, “opinion”, “should”, “could”, “may”, “target” and other similar expressions are intended to identify forward looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. You are cautioned not to place undue reliance on forward looking statements. Although due care and attention has been used in the preparation of forward looking statements, such statements, opinions and estimates are based on assumptions and contingencies that are subject to change without notice, as are statements about market and industry trends, which are based on interpretations
statements including projections, guidance on future earnings and estimates are provided as a general guide
guarantee of future performance. Recipients of the document must make their own independent investigations, consideration and
agrees that if it proceeds further with its investigations, consideration or evaluation of investing in the company it will make and rely solely upon its own investigations and inquiries and will not in any way rely upon this document. This document is not and should not be considered to form any offer or an invitation to acquire Stanmore Coal shares or any other financial products, and neither this document nor any of its contents will form the basis of any contract or commitment. In particular, this document does not constitute any part of any offer to sell, or the solicitation of an offer to buy, any securities in the United States or to, or for the account or benefit
US Securities Act of 1993 (“Securities Act”). Stanmore Coal shares have not been, and will not be, registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to any US person without being so registered or pursuant to an exemption from registration. 2
Stanmore Coal March 2017 Quarterly Presentation
Queensland based coal development company, operations at Isaac Plains Coking Coal Mine Sprint Capital HK (Greatgroup) Board and Management Corporates Other Private
22% 3% 37% 38% Strong shareholder base Advanced metallurgical and thermal coal development projects in the Bowen and Surat Basin Highly experienced Board and management team with proven track record of developing and
Actively pursuing further
market downturn conditions 3
Stanmore Coal March 2017 Quarterly Presentation
ASX code SMR Share price A$0.391 Shares 251,107,978 Market cap $97.9m1
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Stanmore Coal March 2017 Quarterly Presentation
(FY17 1.15Mt)
negotiations continued. Recent spot price increase is encouraging
in place
coal cost curve
train load out and other infrastructure 100% owned
4.0Mtpa ROM
secondary thermal coal for export
and creating value where others can’t or won’t
ISAAC PLAINS – 100% Operations BELVIEW – 100% Exploration LILYVALE – 85% Exploration MACKENZIE – 95% Exploration ISAAC PLAINS EAST – 100% Development
THE RANGE – 100% Development (pending infrastructure) CLIFFORD – 60% Exploration & studies
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Stanmore Coal March 2017 Quarterly Presentation
Time horizon Internal External Short
Medium
assessment of Isaac Plains Underground
value to shareholders
with premium coal quality Long
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Stanmore Coal March 2017 Quarterly Presentation
In place Under way
MANAGING DIRECTOR
CHIEF FINANCIAL OFFICER
United States
GENERAL MANAGER OPERATIONS
cut and underground operations across the Newlands and Collinsville complex in the northern Bowen Basin.
feasibility studies and financial evaluation of new projects and brownfield expansions.
GROUP MANAGER DEVELOPMENT
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Stanmore Coal March 2017 Quarterly Presentation
4 6 8 10 12 14 16 18 20
10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Recordable injuries Hours worked Total Recordable Injuries (RHS) TRIFR
During the March quarter, there were no injuries (TRI) at the Isaac Plains Mining Complex, with no other injuries recorded across other projects and tenements The Total Reportable Injury Frequency Rate (TRIFR) at quarter end is 11.14 per million hours. 9
Stanmore Coal March 2017 Quarterly Presentation
In December 2016 the Company announced a capital raising for A$15 million (pre costs) to invest in both pre- strip advancement and coal inventory, based on a Revised Mine Plan (RMP). Ramp-up of pre-strip activities in March quarter have been impacted by recent tightening in the labour
and equipment to enable meeting planned production for the following quarters. As the mining contract was negotiated on a rolled-up rate basis, the increase in costs for these additional operators and equipment is to the Contractors’ account. Total stockpile build (run-of-mine and product coal) is a key focus of the RMP to improve the reliability and repeatability of operations. Inventory build for ROM and product coal in March quarter increased 14kt and 22kt respectively, representing a further investment in working capital of $1.9m Inventory levels are anticipated to increase above 300kt in the June quarter given unavailability of critical transport infrastructure as a result of Tropical Cyclone Debbie (TC Debbie).
100 150 200 250 300 350 400 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Actual Projection
8 12 16 20 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Actual Projection
*RMP refers to the information provided in the ASX presentation titled “Capital Raising Presentation” dated 14 December 2016
STOCKPILES (PRODUCT + ROM TONNES)
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Stanmore Coal March 2017 Quarterly Presentation
2,000 3,000 4,000 5,000 6,000 7,000 Q1-FY17 Q2-FY17 Q3-FY17 Q4-FY17 2H-FY17* LOM Actual Average Quarterly Projection kbcm
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Stanmore Coal March 2017 Quarterly Presentation
*2H-FY17 refers to prior guidance provided in the “Half Year 2017 Results Presentation” dated 28 Feb 2017
Although total overburden was largely in-line with plan, the linear speed of the dragline was impacted by increased rehandle, designed to maximize recovery of each repeated coal sequence around the fault zone. The June quarter mining sequence will be less impacted by faulted zones, which is anticipated to improve, waste mining, coal recovery and coal yields (refer following slide). Overburden performance for the month of March was encouraging and provides the Company with confidence around achievability of performance for the June quarter.
4.8 0.3 0.2 0.3 0.8 6.4 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 March Quarter Prime Waste (Actual) Additional manning/ excavator Additional manning/ dozer Additional cast blast Coal repeats not mined/ dragline lineal progression June Quarter Prime Waste (Projection) Million BCM's
Although the March quarter was behind prior guidance, mining was impacted by labour availability and slower than expected mining around a known major fault (refer diagrams below). Increases to manning and an additional excavator and dozer mobilised to site are anticipated to improve waste removal and coal mining in the June quarter. The ramp- up in manning together with an additional excavator contributes a further 0.3Mbcm above the March quarter result, while additional dozer hours are expected to contribute 0.2Mbcm. This increase in pre-strip will enable an additional cast blast of 0.3Mbcm to occur in the June quarter. In addition to increased excavator availability in the June quarter, the dragline lineal progression will be significantly improved by not mining known blocks of coal seam repeats, where coal losses were experienced in the March quarter. The increased speed of the dragline is anticipated to result in an additional 0.8Mbcm prime waste in the June quarter. 12
Stanmore Coal March 2017 Quarterly Presentation
40 60 80 100 120 140 Q1-FY17 Q2-FY17 Q3-FY17 LOM Actual FOR costs FOR to FOB costs State Royalties
100 150 200 250 300 350 400 Q1-FY17 Q2-FY17 Q3-FY17 Q4-FY17 2H-FY17* LOM Actual Average Quarterly Projection k tonnes Highwall Open-cut
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Stanmore Coal March 2017 Quarterly Presentation
*2H-FY17 refers to prior guidance provided in the “Half Year 2017 Results Presentation” dated 28 Feb 2017
The March quarter shortfall for product tonnes produced compared to prior guidance is the direct result of:
in-pit and unable to be extracted.
the repeated coal seams in the known faulted zone.
together with the delays experienced from TC Debbie and coal losses, has resulted in a reforecast of the anticipated product tonnes produced for FY17 to 1.15Mt. March quarter FOB costs were A$112/tonne, impacted by the fixed cost base spread
With the expected delays to rail infrastructure arising from TC Debbie, June quarter costs are anticipated to be above life of mine (LOM) levels as fixed costs such as take-
costs, will all remain payable during the expected delay period.
tonnes from the previous quarter are delivered, assessed on a contract by contract basis.
prices will apply to approximately 70% of sales in the June quarter.
than the March quarter, resulting from delays to infrastructure availability following impacts of Tropical Cyclone Debbie. The Company is assessing a range of options for alternate sales
March quarter was USD 94 per tonne (AUD 124 per tonne), including thermal coal sales.
20% 65% 15%
Q1 FY17 price Q2 FY17 price Q3 FY17 price
30% 70%
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Stanmore Coal March 2017 Quarterly Presentation
Quarterly benchmark by proportion of tonnes sold Semi-soft sales of 97kt
Quarterly benchmark by proportion of tonnes sold Semi-soft sales estimate
Source: Platts Coal Trader International
50 100 150 200 250 300 350
2011 2012 2013 2014 2015 2016 2017
US$/tonne
Hard Coking Coal Semi-soft Coking Coal Thermal Coal
The June quarterly 4Q17 benchmark negotiations for semi-soft coking coal price have been delayed given both miners and end users continue to assess the impact of TC Debbie. The observed increase to spot price, driven by coal supply issues throughout key Queensland export regions caused by TC Debbie, is likely to drive an improved price outcome for the June quarter compared to prior expectations of the Company. Management view that prices remain supported in the medium term, at levels to incentivise capital investment decisions to replace depleting supply sources of coking coal. Contract negotiations with existing customers have been finalised at contract volumes of approximately 800kt, with improved relativity achieved to benchmark across the portfolio. A significant portion of the carry-over position from the previous Japanese Fiscal Year has been priced at the March 2017 quarter price. 15
Stanmore Coal March 2017 Quarterly Presentation
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Stanmore Coal March 2017 Quarterly Presentation
Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY19
Potential first coal at Isaac Plains East Potential grant date for Mining Lease, allowing mine construction to commence Public notification period Resolution of key negotiations with landholders &
parties EA Amendment and ML Applications lodged Progress during the March quarter resulted in resolving
negotiation with landholders. The Public notification process will follow the finalisation of these negotiations. The target of potential first production for Q3 FY18 may see some slippage if landholder negotiations are prolonged and objections are lodged post the notification process.
Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY19
Exploration planning and project scheduling Feasibility focusing
pillar techniques and potential funding mechanisms for development capital Target Investment decision
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Stanmore Coal March 2017 Quarterly Presentation